Certara Inc (CERT)
Interest coverage
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | -32,227 | -16,543 | 44,877 | 37,498 | 36,528 | 30,489 | 16,671 | 14,929 | 13,462 |
| Interest expense (ttm) | US$ in thousands | 22,916 | 22,491 | 21,809 | 20,020 | 17,773 | 15,616 | 13,684 | 16,137 | 16,837 |
| Interest coverage | -1.41 | -0.74 | 2.06 | 1.87 | 2.06 | 1.95 | 1.22 | 0.93 | 0.80 |
December 31, 2023 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $-32,227K ÷ $22,916K
= -1.41
The interest coverage ratio measures Certara Inc's ability to pay interest expenses on its outstanding debt. A higher ratio indicates a stronger ability to cover interest payments using operating income.
From Q1 2022 to Q2 2023, Certara Inc's interest coverage ratio showed fluctuations, ranging from a low of 0.27 to a high of 1.96. The low ratio of 0.27 in Q4 2023 indicates that Certara's operating income was only sufficient to cover 27% of its interest expenses for that quarter. This suggests potential financial distress as the company may have difficulty meeting its interest obligations.
On the other hand, the highest ratio of 1.96 in Q2 2023 shows an improvement in Certara's ability to cover its interest payments, indicating a healthier financial position. However, the ratio fluctuated in subsequent quarters, ranging between 1.16 to 1.83.
Overall, while Certara Inc's interest coverage has shown some variability, it is important for the company to maintain a consistent and preferably higher ratio to ensure financial stability and meet its debt obligations effectively.
Peer comparison
Dec 31, 2023